Airbnb Host Taxes in Montana - 2025 Guide

Updated for 2025 (Filing 2024 Taxes)

Is Airbnb Host income taxable in Montana?

Yes, income earned as an Airbnb host is absolutely taxable, both at the federal and Montana state levels. The IRS considers Airbnb hosting a business activity, meaning you’ll need to report your earnings and expenses.

Federal Requirements: You’ll report your Airbnb income and expenses on Schedule C (Profit or Loss From Business), which is filed with your Form 1040. This schedule allows you to deduct all ordinary and necessary business expenses, ultimately determining your net profit or loss.

Montana Specific Rules: Montana has a graduated income tax system, meaning the tax rate you pay increases as your income increases. Your net profit from your Airbnb (after deducting expenses on Schedule C) will be added to your other income (wages, investments, etc.) and taxed according to Montana’s tax brackets for the 2024 tax year (filing in 2025). You’ll file this information on Montana Form 2, Individual Income Tax Return. Montana also allows for itemized deductions, which may further reduce your taxable income. Be sure to check the current Montana Department of Revenue website for the most up-to-date tax brackets and forms.

Top Tax Write-offs for Airbnb Hosts

• Mortgage Interest & Property Taxes: If you own your property, you can deduct the portion of your mortgage interest and property taxes that relate to the time the property is used for Airbnb rental. If you rent your entire home for more than 14 days, you can deduct the full amount. If you rent a portion of your home, the deduction is limited to the rental percentage.
• Utilities: Expenses like electricity, gas, water, internet, and cable are deductible, again based on the percentage of time the property is used for rental. Keep detailed records!
• Cleaning & Maintenance: Costs associated with cleaning services, repairs, and general maintenance (plumbing, landscaping, etc.) are deductible.
• Mileage & Vehicle Expenses: When you drive for Airbnb-related activities (guest check-in, grocery shopping for guest amenities, trips to the hardware store for repairs), you can deduct mileage. For 2024, the standard mileage rate is 67 cents per mile (verify this on the IRS website: https://www.irs.gov/newsroom/standard-mileage-rates-for-2024). Alternatively, you can deduct actual vehicle expenses (gas, oil, repairs, insurance, depreciation) if it results in a larger deduction.
• Airbnb Fees: The fees Airbnb charges you for using their platform are a deductible business expense.

The 15.3% Self-Employment Tax Surprise

Because you’re considered self-employed as an Airbnb host, you’re responsible for paying both the employer and employee portions of Social Security and Medicare taxes. This is known as self-employment tax.

You’ll calculate this on Schedule SE (Self-Employment Tax). The combined rate is 15.3% (12.4% for Social Security up to the annual wage base, and 2.9% for Medicare). You only pay self-employment tax on profits exceeding $400. The good news is that you can deduct one-half of your self-employment tax from your gross income on Form 1040, which helps reduce your overall tax liability.

Closing Tip for Montana Residents

Running an Airbnb in Montana can be a rewarding experience, but staying organized with your income and expenses is crucial for a smooth tax filing process. Consider using accounting software designed for self-employed individuals or working with a qualified tax professional (like myself!) to ensure you’re taking advantage of all available deductions and complying with both federal and Montana tax laws. Don't hesitate to consult the Montana Department of Revenue website (https://revenue.mt.gov/) for the latest information and resources.